Although the Planet Hollywood organization owned in part by film stars announced its intention on Tuesday to file for federal bankruptcy protection, an executive of Topa Equities says he is optimistic that plans for one of the restaurants to open on St. Thomas this fall will go forward.
"Grupo ECE, the Planet Hollywood franchisee and the lease holder of the property slated for the St. Thomas location of Planet Hollywood, is a tenant in good standing," Fraser Drummond, senior vice president of Topa Equities (VI) Ltd., told The Source.
The property leased by the firm is the onetime Burger King site at a prime location on the St. Thomas waterfront, at the Raadets Gade intersection.
When Burger King occupied the premises, the entire front of the two-story building consisted of plexiglas windows in a modernistic design that contrasted starkly with the traditional West Indian architecture of much of the historic downtown district. Badly damaged by Hurricane Marilyn four years ago, the fast-food franchise never reopened.
Topa subsequently reconstructed the exterior in a West Indian motif, but the pale yellow structure with dark blue shutters and white trim has remained closed.
"We remain optimistic that they will establish themselves as a feature of the Charlotte Amalie waterfront in time for the upcoming busy season," Drummond said of the ECE Planet Hollywood franchise organization.
The Planet Hollywood Inc. PHL corporate entity announced from its headquarters in Orlando, Fla., on Tuesday that it intended to file for Chapter 11 protection in U.S. Bankruptcy Court while attempting to get out from under a quarter-billion dollars in debt and hoped to pre- negotiate with lenders. In April, the company failed to make a $15 million interest payment on the $250 million in bond debt, wire services reported.
According to the wire reports, the enterprise, which operates about 80 movie-themed restaurants and nine All-Star Cafes across the United States and abroad, has secured a conditional $30 million cash infusion to keep the operation going.
Planet Hollywood was started in 1991 with actors Arnold Schwartzenegger, Bruce Willis and Demi Moore and businessmen Robert Earl and Keith Barish as partners. Barish left the company in March after selling about half of his holdings in the company. Earl continues as chief executive officer. According to Earl, all of the film stars involved will remain on board.
The Reuters, AP and PRNewswire services reported that the $30 million in working capital was put up by Planet Hollywood shareholders including Saudi Prince Alwaleed Bin Talal, Singapore investor Ong Beng Seng and a trust for Earl's children. In return, they are to get a 70 percent stake in the company, with the remaining 30 percent to be made available to other creditors.
According to Reuters, Earl said company bondholders were meeting this week to review the plan, which would wipe out the current equity.
The wire reports said Planet Hollywood underwent a rapid expansion in 1996-97 but that business at the trendy restaurants has since then been declining. Merchandise sales, which account for about a third of revenues, are reported to be off 31 percent from last year.
The company has been trying to cut costs by reducing corporate overhead, improving cost-control, streamlining operations and disposing of non-essential assets.
Drummond said it was Topa Equities' policy "not to comment on the status of our tenants' business affairs."
